what is Accounting Profit

Posted on 01-05-2016
By leena

what is Accounting Profit:

Accounting profit may be referred to as net income, net profit, net earnings, or the “bottom line” (of the firm’s income statement. It is equal to total revenue less all accounting costs. Accounting costs are explicit costs that represent actual payments for the resources the firm uses in producing its output. Accounting costs include the interest cost on debt financing but not any payments to the firm’s equity owners as a return on their investedcapital.Accounting profit = total revenue – total accounting (explicit) costs